Disability Retirement and FEGLI

Disability Retirement and FEGLI

No doubt you are aware that you can continue your Federal Employee Group Life Insurance (FEGLI) life insurance into retirement. But what happens to FEGLI if you seek disability retirement at an earlier date and OPM approves it?

The simple answer is that as far as FEGLI is concerned, it’s just a separation from federal employment and treated as such. Unlike FEHB, there is no waiver of the 5-year rule.

In other words, you may be eligible to continue your FEGLI coverage if you have had it for the five years immediately preceding the date when you transition from being a federal employee to disability retirement. If you have had FEGLI coverage for less than five years, you cannot continue it into disability retirement.

Also note that even if you are eligible to continue with FEGLI coverage into your disability retirement, you may not add coverage and FEGLI options at this point. You can, of course, opt to not continue the FEGLI coverage.

 Should You Buy Life Insurance to Supplement FEGLI After Disability Retirement? 

You should also know that you may be able to buy life insurance from private insurers that offer you a lower premium and more flexibility to add or reduce coverage as and when you feel the need for it.

On the other hand, FEGLI life insurance for federal retirees requires payment of higher rates and you have no way to modify or enhance coverage unless you can come up with a qualifying life event (QLE) or bump into a rare FEGLI open season.

Also note that FEGLI has no cash value. So at the very least, you should consider additionally getting whole life insurance which has a cash value that you can borrow against. If you have taken disability retirement, it’s a good bet that you haven’t been able to build up a big enough retirement nest egg by that point. So your life insurance premium should contribute towards your retorement savings as well.